Candidates starkly divided on economy

Democrat Barack Obama and Republican John McCain are both bracing to take over a troubled economy in January.

But their assessments of how dire the situation is — and their remedies for fixing it — are as different as the two presidential rivals themselves and their life experiences.

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Obama sees an economy fraught with peril and would press immediately for a new economic stimulus package to help state governments, ease energy costs and steady the market in the short term.

His roots as a community activist in Chicago are woven throughout his long-term economic agenda, which calls for an activist government bent on providing a broader safety net and empowerment for the working class.

The Illinois senator’s main objective, said his economic adviser, Jason Furman, is “to make the economy grow and have the middle class share in that growth. To that end, he believes in bottom-up growth — empowering middle-class families to success through, for example, subsidies for a collect education, help for saving and more affordable homeownership.”

McCain sees a more mixed economic picture, with some sectors holding their own while others teeter. He has yet to push a second economic stimulus plan, preferring instead to see the full impact of the stimulus package already passed by Congress.

For the long term, the Arizona senator’s unorthodox mix of conservatism, populism and label-bucking is evident in his embrace of broad tax cuts coupled with more-specific programs designed to help small businesses on Main Street rather than major corporations and big financial houses on Wall Street.

“This is a guy whose instincts are to dislike concentrations of power. He believes bad things happen when power concentrates in business, unions, consumers and a government,” said McCain’s top economic adviser, Douglas Holtz-Eakin. “His idea is to get a level playing field, let everyone have access to it, and let it rip and see who wins.”

With the economy now the top concern among voters, the presidential candidate who can best persuade voters that he has the formula for turning the market around will surely gain significant advantage in November.

Here again, the campaigns show striking differences that flow largely from the personalities, philosophies and primary campaign journeys of the two rivals.

Since defeating Hillary Rodham Clinton, Obama has veered to the center with his economic message. The June appointment of Furman, which caused heartburn for some labor leaders, was viewed widely as shift toward the pro-trade, Wall Street-friendly economic thinking of Furman’s mentor, former Bill Clinton Treasury Secretary Robert Rubin.

“Jason is at the core, and he’s tasked with bringing in different perspectives,” said John Irons, the research and policy director at the left-leaning Economic Policy Institute.

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The other full-time economic adviser on Obama’s team is Austan Goolsbee, a University of Chicago economics professor whose profile was lowered after he reportedly told Canadian officials that Obama was not as eager to substantially change the North American Free Trade Agreement as his primary campaign rhetoric suggested.

Obama’s core group of outside advisers ranges from Rubin to Jared Bernstein, a senior economist at the Economic Policy Institute who is considered more to the political left. Other voices that will weigh in on issues are those of former Treasury Secretary Larry Summers; Laura Tyson, who chaired the Clinton administration’s National Economic Council; and Robert Kuttner, founding co-editor of The American Prospect.

The group doesn’t meet formally or hold regular conference calls. Furman calls on members on an ad hoc basis. If the hot issue is housing, he’ll convene experts on mortgage finance. If it’s General Motors, he’ll track down automotive experts. “It’s an issue-by-issue thing,” he explained. “It’s a continuous conversation.”

Obama is offering a complex and aggressive set of proposals to cure the economy. Among them, he would push for tax breaks for middle-class families paid for by tax hikes on the wealthy to move money into the hands of consumers most in need of it and most likely to spend it. On health care, he embraces a comprehensive reform plan that would come close to mandating that people get insurance coverage.

While Furman is the behind-the-scenes maestro, the hard-fought primary campaign enabled Obama to fine-tune and master his economic message on the campaign trail.

That done, he’s now better prepared to pounce on McCain’s mistakes, as he did recently when one of McCain’s advisers suggested that today’s troubles are largely psychological.

“Today, one of [McCain’s] top economic advisers, former Sen. Phil Gramm, said that we’re merely in a ‘mental recession,’” Obama told a crowd of about 2,800 at a town hall meeting in Fairfax, Va.

“He didn’t say this, but I guess what he meant was that it’s a figment of your imagination, these high gas prices. Sen. Gramm then deemed the United States, and I quote, ‘a nation of whiners.’ Ho! A nation of whiners. This comes after Sen. McCain recently admitted that his energy proposals for the gas tax holiday and the drilling will have mainly, quote, ‘psychological benefits,’” Obama said.